Iranian startups tap into vacation rental market
Iranian startups tap into vacation rental market
Summer is here! A season in which everyone wish to hit the roads and spend long days of summer in other locations and cities. In recent years, many Iranian startups and applications launch their online vacation rentals, which provides passengers with eco lodges as well as rentals that they can reserve with internet for their sojourn in different cities of Iran.

According to a recent report published by TechRasa, an Iranian startup and tech media on June 24, vacation rental has a 41,280 billion rials (about $980 million) market in Iran, which is the reason that Iranian startups are trying to tap into this market and bring it online.

A vacation rental is the renting out of a house, apartment, villa or any accommodation to a tourist as an alternative to hotels.  In the past three years, a few players have entered this market.

According to the report on vacation rental market in Iran, only two percent of bookings are done online in Iran yet, which shows the potential of this market for online platforms.  Note that the average commission rate for connecting the host to the guest is about 16.6%.

The report also reveals the percentage of different accommodation types. This percentage is based on per person per Night number in total. This means that tourists have used vacation rentals (with an overnight stay) more than any other type of accommodation. The biggest share of the market goes to vacation rental with 31 percent. The runner up is private accommodation with 23 percent. It follows by public accommodation including hotels with 13 percent, which is neck to neck with staying in tents with 12 percent. The remaining nine percent goes to other types of accommodation.

The business model for vacation rentals is an example of a shared economy in which, individuals give services to each other and unlike the traditional model (hotels), people participate and earn money themselves.

In this model, the online platform connects tourists to hosts. Benefiting from the vacant capacity of any rentable accommodation including people’s houses, apartments, and villas as well as helping the owners to earn money by renting their property for a short period of time.

The online rental vacations noticeably decreases the cost of accommodation services for tourists, which in turn can help to stimulate the country’s economy. In addition to that, empowering this market can help local businesses and stores such as restaurants, recreational and commercial centers to grow too.

Average basket value of 7.110 million rials

In 2018, local tourists rented the accommodations in groups of 3.8 people for about 2.4 days on average. The cost of a vacation rental for 2.4 days, with the average daily rate of 2.930 million rials (about 70 dollars), is about 7.110 million rials (about 170 dollars).

5.8 million vacation rental bookings per year

In 2018, vacation rentals had nearly 5.8 million bookings of 24,000 owners and 64,000 properties. The notable point is that it has been the direct and indirect source of income for 103,000 people.

Comparing vacation rental market with other sectors in Iran

Tourism in Iran has an estimated market size of 5 to 6 trillion rials (about 120 to 140 million dollars) annually which consists of different sectors. The vacation rental market with 41,280 billion rials (about $980 million) market in Iran, annual market size is a part of the tourism industry in Iran.

According to the report, the local hotel annual market is about 40 to 50 trillion rials (about $952 -$1,190 million) in Iran while the annual foreign hotel market is more than 15 billion rials (about $357,000).

The annual ecotourism market reaches about 20 trillion rials (about $476 million) which only a few of the vacation rental platforms have entered to.

The vacation rental market can also be compared to other startup sectors such as fintech and transportation.

The report shed lights on road transportation market in Iran. According to the report, the annual bus ticket market is something about 30 trillion rials (about $714 million).The annual motorbike delivery market is about 4,000 billion and the annual ride-hailing market in Tehran and seven other big cities is about 80 trillion rials (about $1,900 million).

The annual taxi change transaction market in Tehran and seven other big cities is nearly 60 trillion rials (about $1,420 million).

How vacation rental market size in Iran is calculated?

The main sources of this market research are the reports and surveys done by the Statistical Center of Iran from 2008 to 2018 which is generally done just for the season of spring. The main focus of these reports is on giving statistics on tourism in Iran.

However, the report considers the average length of stay, daily rate of vacation rentals, number of guests per stay, annual average number of properties’ rented days, number of properties owned by the host, number of owner’s dependents, commission rate, and percentage of bookings done online for more precise analysis.

The required data are compiled directly from five Iranian online vacation rental platforms.

Global vacation rental market size

According to, with the slowdown in world economic growth, the vacation rental industry has also suffered a certain impact, but still maintained a relatively optimistic growth, the past four years, vacation rental market size to maintain the average annual growth rate of 10.81% from 61 million $ in 2014 to 83 million $ in 2017, Research analysts believe that in the next few years, Vacation Rental market size will be further expanded, we expect that by 2022, The market size of the Vacation Rental will reach 165 million $.

The global vacation rentals market has witnessed a rapid growth in the past few years, owing to the growing tourism industry worldwide. As compared to hotels, vacation rentals offer more flexibility with lodging. It is a cost-effective and more comfortable accommodation option for people looking to stay for a longer period of time, probably a week or more.

This market is growing off the online booking trend. The preference for instant bookings has increased among the consumers, and online booking provides an increased degree of service differentiation, by presenting many options for accommodation at varied price ranges to the customers. Farmhouses, private homes, beach houses, villas, cabins, cottages, short-term rental apartments, are only a few of the several types of housing places that are up for booking.

The increase in the number of domestic and international travels has given rise to the popularity of these short-term rental properties. They are convenient to book, with minimal to zero wait time, thus increasing customer satisfaction. These vacation rental homes are present on web-based listing sites, where customers can leave reviews for other customers to take advantage of, and suggestions for the homeowners to improve their stay. However, despite these listings, the major restraint in this market is the presence of fraudulent vacation rentals.

  • source : Mehrnews